Fox preps DTC service targeted at ‘cord cutters and cord nevers’

Fox Corp. will launch a direct-to-consumer streaming service later this year, encompassing what CEO Lachlan Murdoch described as a “holistic” blend of the media company’s live-sports, political opinion and entertainment programming. The goal, he added, is to lure in “cord cutters” and “cord nevers.”

Murdoch was light on specifics for the new platform, which was announced Tuesday during the company’s blowout fiscal second-quarter earnings report (press release and webcast available here). The company posted revenue of $5.08 billion, which was up 20% year on year thanks to huge pre-election ratings and advertising spending on Fox News, along with monetization of a resurgent World Series and the always big NFL regular season.

With all of Fox’s affiliate deals locked up for fiscal 2025, Murdoch was careful to message that the new DTC service would not cannibalize the media conglomerate’s pay TV business. Or, “at least I hope it doesn’t,” he hedged.

“We sell the traditional cable bundle as still having the most value for consumers and frankly the most value for the company,” Murdoch told equity analysts. That said, “we do want to reach consumers who are part of a large population that are now outside the traditional bundle."

“We do not want, and we have no intention of turning a traditional distribution customer into a DTC customer, Murdoch added. “So, our subscriber expectations will be modest, and we are going to price the service accordingly.”

He said the new streaming service will leverage only content within Fox’s existing rights portfolio and will not drive additional licensing cost for the company.

“Incremental cost will be relatively low, certainly relative to what others in the space,” Murdoch said.

Additional information about the new service will be arriving in the coming weeks.

Report rundown

Murdoch pointed to the scuttling of Venu Sports, the joint streaming venture with Disney and Warner Bros. Discovery that failed due to anti-trust issues, as perhaps the lone “disappointment” amid an October-December period during which Fox was up in virtually every sector. 

Free ad-supported streaming service Tubi, for example, saw its fiscal Q2 revenue increase by 31% YoY, with political ads spilling over to the FAST. 

But it was right-wing political opinion platform Fox News that was once again the company’s biggest audience driver, delivering 4.5 billion hours of consumed content in fiscal Q2 with overall ratings up over 50%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) doubled YoY to $781 million.

Notably, Fox is just as bullish about the ongoing fiscal Q3, with the Fox Broadcasting Network sold out on commercial time for Sunday’s presentation of Super Bowl LIX. Fox has been collecting $8 million per 30-second commercial spot for the premiere live-sports event.

Fox will also show Super Bowl LIX on Tubi.